FRANKFURT (MNI) – Markets will normalize further, despite the
current uncertainty surrounding the situation with Ireland, European
Central Bank Vice President Vitor Constancio said Wednesday.
The economic recovery in the single currency area is at present
moderate, but is proceeding as expected, the central banker told
reporters following his appearance at a panel at Euro Finance Week here.
The ECB looks at the overall situation in the Eurozone to make
policy, he reiterated.
On the issue of banks that are addicted to ECB financing,
Constancio indicated that this was a “legacy” of the financial crisis
and that the issue will be dealt with as the crisis winds down.
Asked if markets would normalize after the Irish situation,
Constancio said, “Yes, I would certainly expect that. I think Europe has
proved in the recent past that it can deal with these sort of problems.”
The “current recovery is still going on at the euro level, as
anticipated,” he said.
“When we decide our policy, we take into consideration the overall
situation that exists in the euro area,” he reiterated.
“Of course we have to see what happens…but at least until now the
economic recovery, though moderate, is going according to expectations,”
he said.
Constancio evaded a question on whether he was concerned about the
reliance of Irish banks on central bank funding. “Well, as you know, we
have an established policy of collateral. Banks have to present
collateral for their access to liquidity, and that policy is well known,
public, and we proceed according to those rules — no change in that
respect has been introduced to change our rulebook.”
Asked about the problem of banks being addicted to central bank
funding, he said, “that’s a situation which in some ways is linked to
the financial crisis. It is a kind of legacy, and will be dealt with as
we come out of this situation, as we will in the end, of course.”
–Frankfurt bureau, +49-69-720142, tbuell@marketnews.com
[TOPICS: M$X$$$,MGX$$$,M$EC$$$,MT$$$$]
